In Personal Finance, Immediate Gratification is NOT Your Friend!

Denver financial planner


That’s one of my favorite sayings, and I say it a lot – especially when it comes to personal finance. However, it applies to so many situations, financial and non-financial; I suspect my daughter will someday believe that it is the only thing I ever say.


How can short-term thinking affect personal finances?

From a psychological perspective, we’re hard-wired to think short term. Ever heard the term instant gratification? “Instant (or immediate) gratification is a term that refers to the temptation, and resulting tendency, to forego a future benefit in order to obtain a less rewarding but more immediate benefit.” You can learn more about the psychology of instant gratification here.

I want to focus on it from a financial perspective, because it shows up frequently in the work I do with clients. I suspect you’ve faced it in your financial life, perhaps even in the scenarios below.


Emphasizing lifestyle now at the cost of lifestyle later.

We can drill down to specifics on this one: houses that are too big, vacations that are too grand, spending too much on consumer goods, etc. etc. You have a finite amount of money and a finite amount of time to save for the future. If you don’t balance the resources you have now with the needs you have now and later, you’ll end up with all needs and no resources in your golden years. No one wants that.


Skipping through your financial life without a plan.

Flying by the seat of your pants isn’t a good way to go about being prepared for your future. Usually, it means you’ll end up under-prepared for whatever lies ahead, be it saving for a home purchase, putting kids through college, or retiring with a respectable standard of living. Ignorance is not bliss. Invest time and energy in learning and planning. You should know how much you can spend and how much you need to save to be prepared for the future.


Utilizing debt instead of saving for the things you need or want.

In recent decades, it seems we’ve moved away from the “old school” method of saving and then spending. Instead, we’ve turned to financing our purchases. Using short-term thinking, we purchase the things we cannot afford through debt. Then, we pay significantly more for the purchase because of the cost of interest on debt. It isn’t a good trend. Certainly, there are times where debt makes good sense (college, home purchase), but it almost never makes good sense for consumer goods, like clothing, electronics, or vacations.


Avoiding risk in investing.

People are living longer and spending more time in retirement. That means that we need more money to sustain us. For most of us, we really need our money to work hard for us. We can’t afford to take no risk, leave our nest egg in the bank, and receive almost no interest or growth. We need higher returns over a longer period of time than what banks can offer. Economics 101 teaches us that higher returns usually comes with higher risk. That’s true, but it’s something we can understand and accept. Short-term thinking encourages us to avoid risk. Long-term thinking requires us to evaluate risk, understand our needs, and invest in assets with the potential to grow over time so we can accumulate the money we need to carry us through our longer lives.


When it comes to personal finance, it’s all about balance. It’s okay to live a nice lifestyle now, as long as you’re also planning for a nice lifestyle later. It’s okay to use debt in the appropriate situations. It is not okay to make short-term decisions for immediate gratification at the cost of long-term financial security. Not sure if you’re on track with your decisions? A Certified Financial Planner™ Practitioner can help you create a plan to enjoy qualify of life now and later.


Andrea Blackwelder Financial Planner

Andrea Blackwelder is a Certified Financial Planner ™ Practitioner and the co-founder of Wisdom Wealth Strategies, a fee-based financial planning and investment advisory practice. Andrea looks at your complex financial planning puzzle and assists you with the best options and financial strategies that align with your financial needs. To contact Andrea, email

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